Fitch Ratings goes “negative” on New Jersey
New Jersey is a wealthy state with lots of industry, excellent higher education institutions and is a “bedroom community” for New York City. But still it faces substantial fiscal problems.
Dow Jones reports that Fitch Ratings has cracked the whip and put the state on “negative” watch. This is the same move that Standard & Poors made on the debt of the United States. Think of it as a shot across the bow. Generally within six months a rating agency will downgrade the issuer or remove the “negative” designation.
From Dow Jones:
Fitch Ratings lowered its outlook on New Jersey’s bonds to negative, citing concern regarding the state’s mounting budgetary pressure amid a significant and growing unfunded pension liabilities, particularly in the context of an already high debt burden.
The ratings agency also cited concerns about the state’s structurally imbalanced budget and the recent court challenge to local K-12 school district funding.
The state’s general obligation bonds are currently rated AA, which is two levels under AAA.